The Importance of Organizational Design and Structure

One of the wonderful things about being a coach is that I meet hundreds of executives who freely share their business and leadership challenges with me. As well as helping me understand how hard it is to run an organization, they show me how they are managing to adapt — or not — to changing organizational structures.

A constant theme during meetings over the last three years has been how globalisation and the economic crisis have forced organizations to rethink their strategies and change they way they operate. From what I can gather, much of this has been “on the hoof,” with companies switching their focus from markets to products or competitors, rather than looking at the big picture. This can result in lots of piecemeal change initiatives rather than looking at the overall organizational design.

I rarely come across leaders who advocate wholesale organizational redesign or use it as a way to support their people and business. When organizational strategy changes, structures, roles, and functions should be realigned with the new objectives. This doesn’t always happen, with the result that responsibilities can be overlooked, staffing can be inappropriate, and people — and even functions — can work against each other.

Often, I see little more than a traditional hierarchy flattening out, perhaps broadening into a matrix structure in parts of the organization. More often than not, though, the hierarchy remains embedded in the “new” structure, which can cut across its effectiveness and leave people confused. Worse, organizations rarely show people how to operate in a new structure, which can also undermine effectiveness.

Many of my clients tell me that they find it increasingly difficult to operate within outdated or dysfunctional structures. My prevailing impression is that organizations either overlook the importance of organizational design or simply don’t know what to do.

This isn’t surprising since the subject is complex and often poorly explained by academics and consultants, finding a practical approach to organizational design can be difficult, although some business schools are attempting to simplify things (pdf).

It is also a pity since structure dictates the relationship of roles in an organization, and therefore, how people function. An outdated structure can result in unnecessary ambiguity and confusion and often a lack of accountability. Structures can be complicated: one British bank where I coach has a clear hierarchy at the top but a complex matrix structure further down which, according to my clients, allows some managers to dodge their responsibilities while others can move troublesome staff around or “exit” them easily.

Poor organizational design and structure results in a bewildering morass of contradictions: confusion within roles, a lack of co-ordination among functions, failure to share ideas, and slow decision-making bring managers unnecessary complexity, stress, and conflict. Often those at the top of an organization are oblivious to these problems or, worse, pass them off as or challenges to overcome or opportunities to develop.

Here are some of the stories I have come across recently — if you have experienced anything similar or have different insights, it would be useful to hear them in the coming week. Any suggestions for pushing back or reshaping unnecessarily complex or outdated organizational structures are also welcome!

The “unworkable” job: a Swiss engineer told me that his boss had bolted on so many parts to his original role that it was becoming impossible to do his work as one part of his role contradicted the other. Moreover, he was stretched beyond his limits by the scope of the role and the fact that he had to operate across several time zones.

Politics: a Hong Kong retail executive said his role was “schizophrenic” because he was required to influence a group of internal stakeholders who had been instructed by their boss not to co-operate with him. The anomaly was the result of historical turf wars between his boss and his boss’ peer: the latter had used his influence to restructure the department and bring it under his control.

Over-regulation: a British banker explained how he was required to get approval from so many people for a major project that he wasted six months trying to get it off the ground, severely limiting his ability to compete in the market.

Applying for your own job: a French executive of an international food company explained how a new chief executive wanted to make his mark by restructuring the group. The exec made people apply for their own jobs, and determine who was redundant.

Cultural clashes: I once worked in a consultancy firm where a sizeable group of people still defined themselves by the organizational culture of a company that was taken over 20 years before. This group made a point of working against the new culture and subverted the company in small and far-reaching ways.

Gill Corkindale is an executive coach and writer based in London, focusing on global management and leadership. She was formerly management editor of the Financial Times.

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